The traditional image of Louisiana politics is of oil and gas lobbyists roaming the Capitol halls with briefcases full of cash to wine, dine and offer contributions to willing lawmakers. Or maybe the more recent, and very real, scene of a legislator handing out checks from riverboat casinos to colleagues on the Senate floor.

The energy industry, gambling and utilities are, in fact, major sources of campaign dollars for Louisiana politicians. But there is another business interest that has quietly risen near the top of the contributor charts while benefiting from favorable public policies.

The nursing home industry, with its mostly for-profit owners, is now among the largest political givers in the state, shelling out nearly $2.8 million in campaign contributions between 2009 and 2012, according to a joint examination of state campaign records by NOLA.com | The Times-Picayune and WVUE Fox 8 News.

The largest beneficiaries of this political largesse, records show, were the campaigns of Gov. Bobby Jindal and state legislators, who have enormous influence over how much the nursing home industry gets in public dollars every year.

Story by

Manuel TorresNOLA.com |The Times-Picayune

Lee ZurikFox 8 News/Fox8live.com

During the four years analyzed, the Jindal administration and lawmakers kept Medicaid payments stable to the nursing homes, while slashing spending for other health care sectors -- including doctors, hospitals, pharmacies and the competing home health care industry.

Jindal, who proposes the state's annual Medicaid budget, and the Legislature, which approves it, has kept nursing home payments up by cutting deeply into a trust fund that was designed to help pay for elderly care for years to come, state officials said.

The state's payments to nursing homes - $796 million last year - remained roughly level even as shrinking public demand has left thousands of nursing home beds empty across the state, according to data collected by Medicare.

For nursing home owners, however, empty beds are not a complete loss. The formula the state uses to calculate nursing home rates includes overhead expenses that result in taxpayers paying for empty bed costs. Department of Health and Hospitals officials would not say how much the state is paying this year for empty beds, but it was more than $23 million as recently as 2010 - and observers said nursing home rates have gone up since then, not down.

"Most other health care providers during this financial downturn have had to deal with a loss of state funding, and the nursing homes have been protected from that loss," said Jan Moller, director of the Louisiana Budget Project, a left-leaning Baton Rouge think tank that has studied the issue. "Their rates have gone up and up every single year, even though the population in nursing homes has actually been declining for most of the last few years."

Jindal did not grant requests for an interview. Kyle Plotkin, his communications director, said in a statement that Jindal has more than 42,000 donors and that "people who contributed to the governor's campaign are supporting his agenda for moving the state forward."

Nursing homes have a special relationship with the government. The federal Medicaid program requires participating states to provide nursing home care while giving the states leeway in deciding how and how much the homes are reimbursed. The states also are responsible for regulating and overseeing nursing homes, which provide care to some of the nation's most vulnerable citizens.

The industry says it has stepped up to fill a vital role in providing that service. Joe Donchess, executive director of the Louisiana Nursing Home Association, said the state encouraged nursing home owners to build facilities and approved new beds in the 1980s and 1990s. The recent drop in demand, he said, is not the industry's fault.

"We build them based on a need," Donchess said of nursing homes. "Now that we have a mortgage of 6, 8, 10 million dollars, does that mean you're going to cut us off at the knees and say we're not going to pay you for that anymore? It's a fairness issue."

Former Gov. Buddy Roemer, however, said nursing homes are a mostly private industry and that he believes there's a link between the industry's campaign contributions and the favorable policy decisions made by Jindal and the Legislature. Roemer said he thinks it demonstrates how Louisiana's campaign finance system favors special interests and businesses with deep pockets.

"The government regulates the rate of pay for nursing homes. There's a direct correlation," Roemer said.

Examining nursing home contributions

In 2005, a series by The Times-Picayune chronicled how Louisiana nursing homes used political contributions and influence to shield the industry from stricter oversight and regulation, policies that advocates said failed to properly protect residents from harm and neglect.

The sheer level of the nursing home industry's donations stuck out during a four-month investigation by NOLA.com | The Times-Picayune and WVUE Fox 8 News to take a comprehensive look at the campaign finance practices in Louisiana. The news organizations gathered records for more than 740,000 contributions between 2009 and 2012 to examine giving and spending patterns by politicians, their supporters and other interest groups.

Reporters identified Louisiana's top 400 donors, a group that gave $63 million, almost a third of all campaign money in the period. Eleven different nursing home companies, owners or interest groups made the list. Other nursing home interests that didn't make the top 400 list also contributed.

The $2.8 million donated by nursing homes surpassed the $2.4 million given by oil and gas, and was much more above the campaign donations of other influential industries, like banking, gaming, telecommunications and utilities.

Jindal was the undisputed No. 1 recipient of nursing home contributions, getting more than $715,000 from the industry between 2009 and 2012.

The second top recipient among elected officials, state Sen. Sherri Smith Buffington, received $124,000 from the industry. State Senate President John Alario and the Alario political action committe controls totaled $100,000. Not far down the list of top officials getting nursing home donations: Sens. David Heitmeier and Fred Mills, respectively the chairman and vice chairman of the committee that considers nursing home legislation.

"Campaign contributions are just part of the process," Donchess said. "People ask us for contributions, we give contributions."

Donchess said he didn't know about the timing of the donations but assumed Jindal was "either paying off campaign debts or wanting to run for something. And if he makes a request for campaign contributions, if our members choose to give, they'll give."

Some lawmakers also received large donations from the industry in a short period of time. In a three-day period in October 2011, Buffington's campaign received nearly $64,000 from nursing homes. On Sept. 22, 2010, nursing homes gave Alario $60,000.

Most of the money given by the industry went to candidates directly from nursing home companies and their owners. But a large chunk of the industry's contributions was delivered through the Louisiana Nursing Home Political Action Committee, or LNH-PAC. The committee is an "affiliate organization" of the Louisiana Nursing Home Association, according to the association's website.

Public records show the LNH-PAC's chairman is Ronald Goux, who also is president of the association.

Donchess made a point that the Nursing Home Association itself does not make campaign contributions, but said the PAC holds its fundraising events for lawmakers in the association's Baton Rouge offices.

"We use our upstairs. The PAC will send out requests to members ... 'If you'd like to come to a fundraiser, come on by and meet with the legislator.' And if they want to make a contribution, they make a contribution," Donchess said.

Bruce Blaney, a former DHH undersecretary, said he has witnessed the coziness between the industry and lawmakers firsthand, and that he believes it has given nursing homes tremendous influence in public policy.

Raiding the Medicaid trust fund

Critics say the state's favorable policies for nursing homes include the Jindal administration and lawmakers' decision to sustain payments to nursing homes in recent years by cutting deeply into the state's Medicaid Trust Fund for the Elderly. The 13-year-old fund was set up with federal dollars to help pay for long-term care into the future. The fund has fallen from $830 million, when Jindal took office, to $410 million as of July, according to Treasury office data.

The state predicts the fund to drop to $250 million or less By the end of this fiscal year next summer.

The fund was originally intended as a steady source of money to help pay for elderly care, by tapping only the interest and not spending the fund's principal. Instead, the principal has been depleted in recent years, mostly to avoid cutting the payment rates for nursing homes, DHH officials have said.

Donchess said his organization identified the federal program that led to the creation of the trust in the first place, and that shielding nursing homes from cuts was an intended use.

"We've been very fortunate in finding that program, and putting that money in a safe place and using it appropriately," Donchess said.

But Secretary of State Tom Schedler, a former state senator who sponsored legislation in 2000 that created the trust fund, has expressed dismay at the way the fund is being drained.

"The loser is, of course, the taxpayer of Louisiana and most certainly the frail and elderly senior citizens for which it was intended to serve," Schedler told The Associated Press in July.

The administration defended the policy. Plotkin said the state is using the trust fund "for the purpose that it was intended for, which is to maintain critical services for elderly Louisiana residents."

At the current rate, however, officials estimate the trust fund could run out of money about the time Jindal finishes his second term. Jindal can't run for re-election, meaning that figuring out how to pay for nursing homes, or making spending cuts, would be the next governor's problem.

Asked about what will happen when the trust fund runs dry, Donchess said: "That's a good question."

Taxpayers shell out millions for empty beds

Just as bad, critics say, is the state's funding formula that ends up paying some nursing homes for empty beds. State officials are even reluctant to answer questions about it. DHH first denied that it paid for empty nursing home beds, then issued a statement that said, in part: "The rate setting methodology does include overhead and administrative expenses that indirectly result in some of the cost of empty beds being calculated into the rates."

In 2007, the department announced an initiative that it said would reduce the portion of payments tied to the empty beds. Three years later, however, the state was still paying millions of dollars a year for unoccupied beds. At a legislative hearing that year, then-state Rep. Walker Hines, D-New Orleans, said $23.1 million in state dollars were being used to pay for unused beds in nursing homes. The state had nearly 9,000 empty beds that year, according to state data.

Since then, Louisiana nursing homes as a whole have had one of the lowest occupancy rates in the country. Last year, a quarter of all nursing home beds, or about 8,700, were empty. DHH would not say how much of the nursing home payments corresponded to those beds.

Plotkin disputed the characterization that the state pays for empty beds. He said the state raised the minimum occupancy level at which nursing homes are reimbursed without a penalty. That percentage went up from 70 percent to 85 percent, Plotkin said, "effectually lowering reimbursement for nursing homes with larger numbers of empty beds."

He also said the administration has reduced the overall number of empty beds in nursing homes by 900 since 2008.

All these policies have come as Louisiana nursing homes remain at or near the bottom of federal rankings by the Centers for Medicare and Medicaid Services. The center collects data from nursing homes and states, and ranks states based on how well the homes fare in health inspections, the number and training levels of nurses on staff and overall quality of care, including treatment and safety of residents.

In the most recent data, released in April, Louisiana ranked 13th based on the results of health inspections, 44th in quality measures and 49th in staffing, the CMS data show. The overall CMS score put Louisiana's nursing home industry dead last among states.

Donchess said errors in coding by Louisiana nursing homes were partly at fault.

"I think some of the ratings are based on some probably incorrect coding on our part. I don't think many of our members were coding for contract nurse practitioners," Donchess said. "And once you see them doing that over the next few quarters, I think we will improve in direct-care staff, and what was called 'professional nurses,' which are actually registered nurses. And we still have, I think, one of the highest levels of LPN (licensed practice nurse) coverage in the country."

Moller and Blaney both said the state policies have left taxpayers spending tens of millions of dollars a year to artificially prop up a private industry that's facing shrinking demand.

"These are private businesses and private businesses should be able to sink or swim," Moller said. "If you're paying for empty beds, you're essentially paying somebody for not being as successful maybe as they should be. Holiday Inn doesn't get paid if they have 30 percent of their rooms empty. But if you're a nursing home and you run essentially a similar business then you get paid by the government."

Moller and Blaney said the administration could choose to let more health care dollars follow the patients, by providing more funding for home care, where there's a waiting list of thousands of people. They noted Jindal has advocated such a policy in schools, pushing for vouchers that students in under-performing schools can use wherever they go.

"There's a fundamental difference between the governor's approach to education, where his idea has been to let parents make the decisions about their child's education and the money should follow that, but he has not followed the same policy when it comes to health care," Moller said.

Blaney said he believes the nursing home industry's contributions "bought the empty bed policy" and other favorable state decisions.

Asked if nursing home contributions are buying favorable legislation, Donchess said, "I don't think so." He said contributions help "pay to educate legislators" and "respond to request for campaign contributions."